BLACKROCK GREATER EUROPE
INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 30 June
2019 and unaudited.
Performance at month end with net income reinvested
|
One
Month |
Three
Months |
One
Year |
Three
Years |
Launch
(20 Sep 04) |
Net asset value
(undiluted) |
8.2% |
12.0% |
12.6% |
55.5% |
423.5% |
Net asset value*
(diluted) |
8.2% |
12.0% |
12.6% |
55.5% |
424.0% |
Share price |
8.5% |
12.0% |
11.4% |
57.4% |
403.5% |
FTSE World Europe ex
UK |
6.4% |
8.8% |
7.9% |
42.8% |
266.5% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value
(capital only): |
397.23p |
Net asset value
(including income): |
400.00p |
Net asset value
(capital only)1: |
397.23p |
Net asset value
(including income)1: |
400.00p |
Share price: |
381.00p |
Discount to NAV
(including income): |
4.8% |
Discount to NAV
(including income)1: |
4.8% |
Net gearing: |
0.8% |
Net
yield2: |
1.5% |
Total assets
(including income): |
£339.4m |
Ordinary shares in
issue3: |
84,858,101 |
Ongoing
charges4: |
1.09% |
1 Diluted for treasury shares.
2 Based on a final dividend of 4.00p per share for the year
ended 31 August 2018 and an interim
dividend of 1.75p for year ending 31 August
2019.
3 Excluding 25,470,837 shares held in treasury.
4 Calculated as a percentage of average net assets and using
expenses, excluding interest costs, after relief for taxation, for
the year ended 31 August 2018.
Sector
Analysis |
Total
Assets
(%) |
|
Country
Analysis |
Total
Assets
(%) |
Industrials |
29.4 |
|
Switzerland |
17.6 |
Health Care |
19.8 |
|
France |
16.7 |
Technology |
17.3 |
|
Denmark |
14.5 |
Consumer Goods |
13.7 |
|
Germany |
13.7 |
Financials |
7.3 |
|
Italy |
7.7 |
Consumer Services |
6.9 |
|
Netherlands |
6.3 |
Basic Materials |
4.2 |
|
Spain |
5.2 |
Telecommunications |
1.8 |
|
Sweden |
5.0 |
Net current
liabilities |
-0.4 |
|
United Kingdom |
4.5 |
|
----- |
|
Israel |
3.4 |
|
100.0 |
|
Ireland |
1.9 |
|
===== |
|
Belgium |
1.6 |
|
|
|
Greece |
1.0 |
|
|
|
Poland |
0.8 |
|
|
|
Finland |
0.5 |
|
|
|
Net current
liabilities |
-0.4 |
|
|
|
|
----- |
|
|
|
|
100.0 |
|
|
|
|
===== |
Ten Largest Equity
Investments |
|
|
Company |
Country |
%
of
Total Assets |
SAP |
Germany |
6.5 |
Safran |
France |
6.4 |
Novo Nordisk |
Denmark |
6.3 |
Sika |
Switzerland |
5.9 |
Adidas |
Germany |
5.1 |
DSV |
Denmark |
4.5 |
RELX |
United Kingdom |
4.4 |
Lonza Group |
Switzerland |
4.4 |
ASML |
Netherlands |
3.7 |
Ferrari |
Italy |
3.7 |
Commenting on the markets,
Stefan Gries, representing the
Investment Manager noted:
During the month, the Company’s NAV rose by 8.2% and the share
price by 8.5%. For reference, the FTSE World Europe ex UK Index
returned 6.4% during the period.
Markets rallied over the month, supported by more dovish
rhetoric coming from central banks sending 10 year German bund
yields to record lows as inflation expectations fell. The
indication that rates could move lower in the euro area led bank
shares lower and they continue to be the worst performing sector in
Europe year-to-date.
In Europe we also saw the
airline industry come under pressure as Lufthansa’s profit warning,
citing fierce competition in domestic markets, dragged the sector
lower.
Manufacturing PMIs once again fell in the region, the fifth
straight month of contraction which continues to be influenced by
production in the autos industry and other industries sensitive to
global trade-war rhetoric.
The Company outperformed the index over the month. This was
driven by strong stock selection and further aided by a positive
contribution from sector allocation.
The Company maintained its overweight towards real world
economic cyclicals, particularly industrials and technology, which
aided returns over the month. The Company also saw a positive
contribution from its long held lower allocation to financials.
Small relative losses were experienced due to the lower weighting
towards basic materials, as the sector led the market over the
month.
The largest single contributor in June was a position in
specialty chemicals distributor Sika as it closed its deal with
Parex during the month, a deal which will allow the company to
realise cost synergies through optimized production. The second
quarter organic revenue growth is likely to be slightly tougher
given the environment for autos production; however, management
remain confident in the margin recovery as raw materials become a
tailwind in the second half and leverage comes through from
improved pricing.
In industrials, the Paris Air Show brought good news for the
Company’s holding in Safran. The group commented that the 737Max
programme it has with Boeing is on track and that aftermarket
guidance remains for high single digit secular growth. The
turn-around plan for Zodiac, the acquisition merged into the group
in Q4 2018, continues apace with an expectation for airline seat
production to move back into organic growth this year. All three
core divisions are therefore showing encouraging trends.
Elsewhere in aerospace and defence, share in Thales also
performed well following a reassuring capital markets day and the
full year guidance for the Gemalto business coming in in line with
consensus. We believe the shares continue to be attractive trading
on a circa 7% free-cash-flow yield.
On the negative side the primary stock specific detractor in the
month was Chr Hansen. The Danish bioscience company reported
disappointing quarterly profit and cut its sales outlook for the
year due to slower growth in all three divisions. We see this as
more of a confluence of separate issues occurring concurrently
rather than a wholesale change to the group’s long run earnings
power and maintain our small weight in the Company.
At the end of the period the Company had a higher allocation
than the reference index towards industrials, technology, consumer
services and health care. A lower allocation was held in
financials, consumer goods, utilities, telecommunications, basic
materials and oil & gas.
Outlook
The near-term outlook for markets remains uncertain, with global
trade war rhetoric a significant influence, driving a deterioration
in certain end markets such as industrial chemicals and autos.
However, we believe the European economy looks reasonably
positioned with a resilient consumer, high capacity utilisation
rates and attractive funding costs. We believe these factors are
likely to drive capex higher through 2019. We have begun to see
tentative signs of the end of the earnings downgrade cycle,
confirming that the recent setback is a mid-cycle slowdown as
opposed to a recessionary environment, although global political
challenges can prove disruptive in the near-term. With a
combination of improving earnings, undemanding valuation and
potential inflection in indicators, we believe investors are more
likely to reassess their underweight position to the region. Within
our portfolios we have a preference for industrial, health care and
technology companies, assessing earnings opportunities through the
lenses of wealth creation, resilience and change. We broadly avoid
positions within financials, particularly banks, telecoms and
materials.
17 July 2019